Power Price Shock Looms: WESM Rates Seen Rising Amid Middle East Tensions
- March 16, 2026
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Electricity costs may rise in the coming months as global fuel market volatility linked to tensions in the Middle East combines with higher summer demand and potential power plant outages, pushing spot market electricity prices up by as much as ₱4 per kilowatt-hour (kWh), according to energy regulators.
The Energy Regulatory Commission (ERC) said simulations conducted by the Independent Electricity Market Operator of the Philippines (IEMOP) show that electricity traded through the Wholesale Electricity Spot Market (WESM) could increase by ₱2 to ₱4 per kWh.
Global Rise In Fuel Prices
ERC Chair and Chief Executive Officer Francis Saturnino Juan said the projected price movement reflects several risk factors, including higher global fuel costs, increased electricity demand during the summer months, and possible plant outages or maintenance schedules.
“There is a scenario where there will be a ₱2 increase. There is also another scenario that the increase can reach up to ₱4, which considered the effects of possible power plant outage and the increase in power demand,” Juan said.
The potential surge in spot market prices is expected to affect electricity bills starting in the April billing cycle, depending on how much power distribution utilities source from the WESM. The spot market serves as a trading platform where electricity generators sell excess power and utilities procure additional supply when needed.
Geopolitical Tensions
IEMOP said its price simulations used global commodity benchmarks as of March 9, reflecting rising prices for coal, natural gas, and oil.
Thermal power plants are expected to increase their offer prices in the spot market to recover higher operating costs. These generators remain a key component of the country’s electricity supply.
The pressure on generation costs has been exacerbated by geopolitical tensions in the Middle East, a major oil-producing region. Crude oil prices have recently climbed past $100 per barrel amid regional conflict, further tightening energy markets.
Energy Secretary Sharon Garin earlier warned that these global developments could lead to electricity rate increases of around 16 percent.
At the same time, electricity demand is rising as temperatures increase during the summer season, historically the period of highest power consumption in the country.
Impact On Consumers
Despite the projected increases in WESM prices, regulators emphasized that the actual impact on consumer bills will depend on how much electricity distribution utilities procure from the spot market.
Juan noted that utilities with higher exposure to WESM purchases would likely feel the strongest impact. “If their WESM exposure is big, that will be the extent of their rate increase, they will bear the brunt,” he said.
However, utilities that rely more heavily on long-term power supply agreements, particularly those without automatic fuel pass-through provisions, may see relatively stable generation costs.
“Whatever the movement in WESM prices, it doesn’t necessarily translate one-to-one to generation costs,” Juan said, noting that the ERC continues to monitor utilities’ procurement structures.
Market Conditions
Earlier data from IEMOP showed that average WESM prices actually declined in February, slipping 1.8 percent to ₱3.50 per kWh from ₱3.56 in January as supply increased faster than demand.
Average nationwide demand rose 3.1 percent to 12,874 megawatts during the period, while available supply climbed 4.4 percent to nearly 19,992 MW, providing a temporary buffer in the market.
Still, regulators said the outlook for April could reverse that trend as fuel costs and demand pressures intensify. The ERC said several market protection mechanisms remain in place to prevent excessive price spikes, including the secondary price cap designed to limit sustained surges in spot market prices.
The regulator has also indicated it could consider staggered cost recovery schemes if price increases prove too burdensome for consumers.
Industry groups have sought to reassure the public that fuel inventories remain adequate and that supply remains stable. Power producers and generation companies have also emphasized maintenance efforts and operational readiness to maintain high plant availability during the high-demand months.
Alternative Fuel Sources
Meanwhile, the Department of Energy said the government is actively seeking alternative petroleum suppliers to cushion the country from disruptions linked to the Middle East conflict.
Garin said potential suppliers have already expressed interest after President Ferdinand Marcos Jr. directed agencies to explore new markets for oil imports. The DOE, working with the Department of Foreign Affairs, is aiming to finalize supply arrangements to ensure deliveries by April.
Data from the department show that about 97 percent of the Philippines’ liquid petroleum imports currently come from other Asian countries, though much of the crude oil processed in the region still originates from the Middle East.
Source:
https://malaya.com.ph/business/wesm-prices-may-rise-by-p2-p4-kwh-in-april-billing-industry-regulator
https://mb.com.ph/2026/03/12/expect-higher-power-rates-next-month-due-to-mideast-tensions-summer
